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ScotEq highlights &#39protection gap&#39

The UK population is exposing itself to a multi-billion-pound “protection gap”, warns Scottish Equitable Protect.

Although rising consumer credit figures indicate people have more financial commitments than ever before, only a minority have made any kind of provision against the risk of defaulting on repayments, says the protection specialist.

Less than a quarter of the UK&#39s 11 million mortgages are covered by protection policies, leaving 77.5 per cent of borrowers exposed should they become unable to work or face unemployment.

Only 5 per cent of people have individual income protection cover while only 3.5 million critical-illness policies have been taken out across the country.

ScotEq Protect argues that while a great deal of public attention has been given to the pension gap, valued at an estimated £27bn, the risks posed by the protection gap have been largely ignored.

Head of marketing Heather Armstrong says: “Millions of people are at risk of being unable to meet their mortgage repayments and other financial commitments should they become ill and unable to work.

“If someone&#39s income dries up because they are out of work for an extended time, they may be unable to save regularly or contribute to a pension scheme, putting their financial future at risk. The Sandler review has highlighted the need for change to ensure the financial well-being of the nation in future years. Making sure people have appropriate protection policies must be seen as an integral part of this.”

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